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Judgment
M.A. Ansari, J.—The appellants are a purchaser and re(sic)tatives of two purchasers of cotton seed(sic) the respondent. In 1943 Kamisetti M(sic) Talapula Subbarayudu and Sunku Chin(sic) shmayya were trading in Tadpatri. G(sic) Mohideen, the respondent, had shops i(sic)nd Raichur. In March, 1943, each of the mere (sic)hants purchased 1000 bags of Javari Cotton Seeds at Raichur. Kamisetti Mallayya bought it the rate of Rs. 8/6/0 per bag. Talapula Sub-(sic)arayudu bought 500 bags at Rs. 8/4/0 per bag (sic)nd further 500 bags at Rs. 8/6/0 per bag. Sunku(sic) Chinna Lakshmayya purchased his 1000 bags at Rs. 8/4/0 per bag.
In the first week of April 1943, the three persons again bought munguri cotton seeds from (sic)ulfarosh Mohideen Sheik Sab in Padagiri. Mallayya bought 1050 bags, Subbarayudu 500 bags and Lakshmayya the same number of bags at the rate of Rs. 8/1/3 per bag. The goods were (sic)ot fully paid on the dates they were purchased, but the entire prices were admittedly paid up on June, 1944. These purchases were made with view to export the goods from the places where they were purchased, which were situated in the been Nizam''s State to what was then the British territory.
At the time of these purchases, however, it as necessary to obtain permits from the Nizam''s Government to export cotton seeds. One of the (sic)sputes between the parties to these appeals is whether the seller had agreed to be solely responsible for obtaining the permits and the purchases were conditional on his doing so. The use of the buyers is that the responsibility to at the permits was of the seller and on his as (sic)rance of getting the permits the sales were (sic)tered into. On the other hand, the case of the and or is that he gave no such promise and that because he belonged to the Nizam''s State, he (sic)ied his best to help the purchasers.
Admittedly all the bags of the cotton seeds would not be exported due either to the failure of (sic)tting the permits or to the railway wagons belong not available. Because of the failures, each (sic) the three purchasers took delivery of 100 bags (sic) 300 bags at Raichur and sold them there, (sic)gain, each purchaser in November, 1943 took (sic)ther delivery of 193 bags at Raichur and sold (sic)em. At about the same time the entire stock (sic) cotton seeds purchased in Yadagiri were sold (sic)ay at that very place. Some bags, however, (sic)re sent out.
In November, 1943, the vendor managed to. (sic) a permit and arranged export of 500 bags to (sic)rraguntla in Cuddapah District. But he sent (sic)e railway receipt to the Central Bank of India (sic) Tadpatri to be realised on payment by the purchasers of the value of the goods. They did (sic) honour the hundi, whereupon the vendor (sic)t his own man to Yerraguntla to take delivery and he sold in November, 1943, these bags (sic) some people of Proddatur.
(sic) Kamisetti Mallayya in his Suit No. O. S. 8/47 the refund of the price of the cotton seeds (sic) asked for Rs. 1000/- on account of the defendant having sold these bags at a profit of Rs. (sic) per bag. The first judgment of the trial (sic)rt in the case, however, found Mallayya (sic)e not entitled to the damages, as the despatch (sic) for the benefit of all the purchasers.
It further held that the three purchasers had (sic)fully paid the price due from them on the (sic) the railway receipt was sent to the Bank; vendor was therefore, justified in demanding (sic)ment and be was further entitled to resell (sic)bags on the refusal to pay. Consistently with (sic)e conclusions, the claim for damages was (sic) allowed. After the case was remanded by the (sic) Court for fresh trial, the claim was given (sic) and the dispute needs no further adjudication.
But to continue with the narration of facts, in June, 1944 or thereabouts, the purchasers exported 300 bags of cotton seeds from Raichur to Trichur. Their case has all along been that these 100 bags to each purchaser were from out of their stock in Raichur, whereas the vendors case at one time was they formed part of a different transaction.
Because of the difference the Court at one time had to determine whether the purchasers were entitled to the refund of price for 607 bags, or 707 bags of cotton seeds at Raichur. Admittedly, no further delivery had taken place. On 20-7-1945, Kamisetti Mallayya issued a notice claiming return of price due to failure to deliver the bags. In the second reply to the notice, the seller claimed that in April 1945 the bags were sold and money debited towards the purchaser''s account.
Notices on behalf of the minor sons of Subbarayudu and by Lakshmayya followed and replies claiming the bags to have been sold and the money adjusted were received. These failures to get back the money have led to the three suits. One is by Mallayya who has since died. The next case is by the minor sons of Subbarayudu, who had died earlier on 26-5-1945. The last is by Lakshmayya.
Mallayya had claimed a sum of Rs. 9578/11/3. His plaint avers that Rs. 880-8-0 was part of the total amounts given on account of the purchases of 2050 bags; that the defendant gave assurance of securing permits from the Hyderabad State for the export; that he failed to carry out the undertaking; that the plaintiff once got 100 bags, which he sold for Rs. 641/4/0; that the entire stock at Yadagiri was sold for Rs. 5963/5/9; that in November, 1943, 500 bags were exported to Yerraguntla, but were wrongly sold to other people; that thereupon the plaintiff became incensed and sent his agent to Raichur for the remaining bags, but could get only 193 bags, which were sold at Raichur for Rs. 1188/-.
The plaint further avers that the defendant could not deliver the remaining bags as he did not have sufficient stock; that in July, 1944 and on great pressure 100 bags were obtained at Trichur and there has since been failure to deliver the remaining bags. This suit is thus for the balance of the amounts due to the plaintiff after giving proper credit. It further covers Rs. 1000/-as damages for the wrongful sales of the goods despatched to Yerraguntla.
The defence comprises the denials of having given any undertaking to procure the permit, of having received the sum of Rs. 880/8/0 and of having sent 100 bags to Trichur out of the stock at Raichur. The further defence is that 707 bags had been sold on 30-1-1945, Rs. 3027/13/0 had been realised, which after deductions on account of the godown rent, Insurance charges and commission, left the balance of Rs. 1605/4/0 which was sent to the plaintiff and admitted to have been realised. On these pleadings six issues were framed in the case.
The plaintiff on behalf of Subbarayudu''s minor sons also complains, of the failure to carry out the undertaking given by the defendant and of the goods purchased at Yadagiri having been sold due to the failure. It admits receipt of 393 bags - 293 bags at Raichur and 100 bags at Trichur - and then complains of the failure to deliver the remaining 607 bags. There are further allegations that the contract had been cancelled and the defendant is liable to pay Rs. 1517/8/0 as damages being the difference between the contract rate and the prices of the commodity at Tadpatri.
The paid price of the seeds was asked for as well as a further sum of Rs. 975/- as the cost of 1950 empty bags. The total claim put forward by these plaintiffs amounts to Rs. 6933/15/0. Apart from the defences of denying the undertaking, of the contract having been cancelled and of having received Rs. 880/- the seller claims to have made adjustments. He further counter claimed on the aforesaid adjustment to be entitled to Rs. 424/8/0 from the plaintiffs. There is also rejoinder by the plaintiffs, but no useful purpose will be served by referring to its details. On these pleadings ten issues were framed.
The allegations by Lakshmayya in his case are similar to those of Mallayya, except that the plaint does not ask for damage for the sale at Yerraguntla. There are also the differences with regard to the number of bags purchased, the amounts paid to the defendant from time to time, and the rates at which cotton seeds were purchased. The total sum so claimed is Rs. 7000/-. The defence, apart from the denial and allegations similar to other defences, asserts that the plaintiff owes a sum of Rs. 585/10/0 to the defendant, which should be allowed with interest. No court-fee, however, has been paid on the counter-claim. In this case 8 issues were framed.
The trial court gave decrees of Rs. 7421/11/3 in favour of Mallayya, of Rs. 4433-7-6 in favour of the two sons of Subbarayudu, and of Rs. 5819/- in favour of Lakshmayya. As the findings of the learned Subordinate Judge on the several issues have been adopted in the judgment now under appeal, it would be useful to have in brief the several conclusions then reached. They are:
That the defendant had not made himself responsible for obtaining permits;
That the payments of Rs. 880/8/0 were not established, and at any rate such illegal gratifications for obtaining permit cannot be recovered;
That Rs. 975/- which formed part of the claim by the two sons of Subbarayudu were admitted to be payable;
That the vendor''s case of having sufficients stock till April, 1945 was incorrect as he did not have sufficient stock of cotton seeds after 18-6-1944;
That the case of having sold the cotton seeds in April, 1945, was not proved;
That the despatch oil 300 bags to Trichur was not part of another transaction and each buyer was held entitled to 607 bags of cotton seeds;
That the claim for damages by the two sons of Subbarayudu on account of their father''s cancellation of the contract was incorrect and was given up by the Vakil;
That the claim for damages of Rs. 1000/-by Mallayya on account of the sale of cotton seed sent to Yerraguntla was incorrect;
That the vendor was entitled to godown rent, insurance charges as well as commission on the bags sold through him;
That the counter claims in the two suits were not proved; and
That the vendor was liable to return to each purchaser the price of 607 bags.
The defendant appealed in all the cases. But by two petitions, the respondents asked for amendments of their plaints in the cases of Mallayya and Lakshmayya. The amendments sought were that the defendant acted either as agent for purchase or was himself the vendor contracting to sell and deliver the cotton seeds, and that he failed as purchaser''s agent or vendor to deliver the balance of cotton seeds. Under the amendments it was further alleged that the defendant failed to perform either as agent or vendor in spite of repeated demands to deliver the seeds and in either case the plaintiffs were entitled to the balance of the price.
The learned Judges constituting the Division Bench, though doubting whether such suit would lie in view of S. 57 of the Sale of Good Act, refrained from expressing any opinion o(sic) the merits of the controversy and allowed the amendments. They remanded the cases, authorised the defendant to file supplementary written statement and directed that after such evidence as the parties wish to adduce the Lower Could was to decide the cases.
The parties have notwithstanding the amended pleadings adduced no fresh evidence. There has been in addition several admission by the Advocates of the parties before the learned trial Judge. The claim to damages of Rs. 1000/- in Mallayya''s case has been given up. The counter claims by the defendant in the case by the minor sons of Subbarayudu and by La(sic) shmayya were not pressed. So also the plaintiff demands of Rs. 880/8/0 in each case were wit drawn. The defendant admitted the despatch bags to Trichur to be part of the stocks at R(sic)chur.
There is a further admission by the defendant of Rs. 975/- in the claim by the minor so of Subbarayudu. Moreover, the Advocate of the plaintiffs has clarified the position by endorsing on all the three plaints that he was claiming under Sec. 61 of the Sale of Goods Act return purchase moneys. The grounds thus of seeking relief of the basis of agency were given up. The controversy therefore, was proportionately n(sic) rowed down and the learned trial Judge h(sic) held that:
The defendant did not undertake to contain permit;
He did not have stock of cotton seeds the time of the alleged sale in April, 1945. but could purchase the commodity after demar(sic) which is legally sufficient;
The plaintiffs were not liable to pay down and insurance charges, but were liable pay commission:
No demand for delivery of cotton sec(sic) was made and therefore, the plaintiffs are (sic) entitled to refund of purchase money under 61;
Because purchase moneys could not got back, interest on them could not be dem(sic)ded; and
The defendant was not an agent, a therefore the issues whether damages could claimed without asking for accounts or whet the defendant failed to perform the duty agent need not be decided.
It will be observed that the main gro(sic) for dismissing the suits is that demands for (sic) very of the cotton seeds were not made. w(sic) is essential for claiming refund of the price ready paid. Therefore, three points require (sic)sions in the appeals. They are: whether there an obligation undertaken by the respondent (sic) secure the permit. The decision in this question in favour of the respondent would not be f(sic) to the appellants: for, it would still be necess(sic) to adjudicate whether the claim for refund purchase money should fail because there no demand for delivery. Should this question be held in favour of the appellants, the next is: what sums they would be entitled to from the respondent. On this point, the trial Court in its judgment under appeals has given no finding; but here are sufficient materials in the earlier judgment in the cases.
Though a large number of letters beginning (sic)rom March 1943 to 19-12-1944 have been pro(sic)uced, not one expressly mentions the under taking to have been given by the respondent. The (sic)wo letters, Exs. A-43 and 60 showing the purchases of cotton seeds at Raichur of 1000 bags each by Subbarayudu and Mallayya, state the (sic)ates to be pass-gadi rates. Lakshmayya as P.W. swears to having made oral purchase of his (sic)000 bags which was also pass delivery. That purchase has been explained to mean that railway receipts would be given and all expenses all loading in waggons would be borne by the respondent.
The fact, however, remains that no documentary evidence is forthcoming expressly showing as to who gave the undertaking to get the (sic)rmits and it must be inferred from the evidence in the cases. Ex. A-1 with which the correspondence opens, states that permit had been produced for cotton seeds also and then it pro(sic)ds to mention that on that account the price cotton seeds had fallen and would fall further. (sic) A-22 is a similar letter to Subbarayudu.. It (sic)ows that before the purchase of cotton seeds (sic)e made obtaining of permit for exporting (sic) commodity had become necessary.
Ex. A-31 is dated March 18, 1953 and says (sic)t the representative of Subbarayudu had read Hyderabad and had met the Vakil Sahib. A-33 which is dated March, 29, 1943, and Ex which is evidently of the same date, are (sic)rs by the respondent to Subbarayudu and Mallayya that so far permits had not been recei(sic) and booking also was not available. Ex. A-24, (sic)ch is a letter by the respondent to Subbarayudu and is of March, 31, 1943, shows that per would be got within 15 or 20 days.
It further mentions that as soon as it is got writer shall despatch the goods. By Ex. A-34 (sic)h is dated April 30, 1943, the respondent (sic)n informed the same purchaser that permit (sic)d be got in 10 or 15 days and as soon as permit was received the seeds should be sent. A-3 is addressed to Mallayya, is dated 1943, and contains similar information. Ex. is dated 9 days later, says that goods would (sic)nt as soon as permit was got and asked Sub-(sic)udu to send his Rangappa to Hyderabad (sic) with the proprietor to try for permits. Ex. (sic)s addressed to Mallayya that permit could (sic)e had, he might send his representative and defendant would act according to his instruc(sic). This is dated 22-5-1943. 1) Now we come to Ex. B-48 which is of 1943, is a letter by Subbarayudu to his re(sic)tative Rangappa and states that he should (sic)diately go to Hyderabad along with the res(sic)nt and spend any amount to get the per(sic) Ex. B-37 is dated 9-6-1943, is from Mallayya (sic) the defendant to go to Hyderabad and say(sic) at he would agree to any term with regard (sic)aining the permit. Ex. B-15 dated 11-6-(sic) s from Rangapoa to the respondent say(sic) at he believes that the respondent should (sic) Hyderabad and spend any amount for ob(sic) the permit.
(sic) 11-9-1943 is Ex. B-10 a letter to the respondent it by Subbarayudu again asking him to get permit at any cost and that no delay should be caused. The letter continues to say that if it was not possible he should send his man to sell the goods. On 22-9-1943, Mallayya wrote Ex. B-45 to his agent saying that he should effect a settlement with the respondent at a loss of Rs. 2.000/- and come away. All the goods at Raichur, however, were not sold and we have Ex. A-28 which is by the respondent''s clerk and is of 3-10-1943, that there was a strong belief about getting permits in 10 or 15 days and as soon as the permit was got the despatch would be made.
The year 1944 opens with assurance from the respondent to Subbarayudu that the permit had not been received and as soon as it was received, information would be given and the goods would be exported. This is Ex. A-38. On 19-2-1944 Ex. B-26 was written which asked the respondent whether it would be better to wait till the permit was received or to sell the goods. Ex. A-40, a letter from the respondent dated 20-2-1944, states that the permit had come, that the Taluqdar was not available, that as soon as he came the writer would go to Madras to get the permission of the Regional Controller and then export the goods. It asked Subbarayudu also to send application to the Regional Controller.
Ex. A-53 is a letter from Mallayya, is dated 27-2-1944, and enquired whether the respondent''s man had gone to Madras for cotton seeds permit, if the addressee wrote the writer''s man would be sent, but it would be better if the addressee should go to Madras and get the work done. Subbarayudu wrote Ex. B-27 on 8-3-1944 that the addressee (the respondent) had written about having received permits from Hyderabad, but not having received permission from Madras, the addressee should send the Hyderabad permission and the writer would proceed to Madras and bring the permission.
Omitting further exchange of letters, we come to 4-6-1944, when Ex. A-11 was written by the respondent. It states that the permit had been received, application would be made for priority and as soon as priority was received the respondent would inform the addressee, Mallayya. It further states that the money should be paid and the goods be exported. Exs. B-7, 31 and. 37 are replies that the appellants would bring money as soon as information was given. By Ex. A-12, which is dated 10-6-1944, information about receipt of priority was given and a cheque for the balance amount was given on 18-6-1944. Evidently railway booking was closed for some time after despatch of some bags to Trichur.
By a letter of 10-8-1944, Ex. A-13, Mallayya was informed that a telegram was sent to Hyderabad for permit; that the permit that was with them, was not in the respondent''s name and that the permit which they were going to get would be in the respondent''s name. Ex. B-40 is of August 31, 1944, is by Lakshmayya asking the defendant''s agent whether permit had been received. Ex. B-33 is a letter from Subbarayudu to the effect that the respondent had written to him that the permit would be received by 19-10-1944, and asking him whether he should send his man Finally, in Ex. A-55, which is dated 10-12-1944, Kamisetti Mallayya says that though the money had been paid the respondent had not informed about the permit though he had said that the permit would soon come and the respondent had caused great loss.
From this correspondence it is dear that the appellant''s representatives had also gone to Hyderabad to obtain permits; they were willing to spare no expense in obtaining them, and the contracts were not cancelled in spite of the failure to obtain the permit. In addition to the documents there is the deposition of P.W. 4, that he and Yangamuni went to bring permits if they were available. There is also the oral evidence of D.W. 1 that there was a custom in Raichur that the purchaser should get permit for exporting. Therefore, the finding of the trial Court in the cases is correct that the respondent had merely to deliver the cotton seeds at Raichur Railway Station if and when permits were obtained and wagons became available, bearing the charges for carrying the goods until they were loaded in the railway wagons at Raichur.
Dealing with the next question arising is these appeals, we would observe that the claim for the return of the money also rests on the doctrine of restitution, which having regard to the circumstances of the cases is the more appropriate basis. There is the finding by the trial court in paragraph 34 of its judgment that the conduct of the parties clearly establish that the parties consider that the defendant should give such delivery only if and after the permits were received. It follows that the whole object of the purchase was to export the commodity. This would be lost by failure to secure permits or wagons.
Under such circumstances, the question after deciding which of the parties were responsible for getting the permit is what did they contemplate should there be without fault of anybody the failure to get the permit. Evidently, such an occurrence was unexpected when the purchases were made. For, there would be no point in buying when the prices of cotton seeds were falling and again reselling at a loss at the came place. The parties, therefore, contemplated export of the purchases with the help of the permits and they continued to expect the permit till the very end of 1944. It is also clear that the failure to get the permit was treated as striking at the root of the contract. Otherwise there would not be the prolonged and almost frantic effort to get the permit in which the respondent admittedly participated.
We would, therefore, investigate the legal position when change of events going to the root of the contract takes place without either party being at fault. In this connection it would be helpful to have the following passage from Pollock''s Contracts (13th Edn.) at p. 232:
After the formation of a contract, certain gets of circumstances arise which, owing to the fault of neither party, render fulfilment of the contract by one or both the parties impossible in any sense or mode contemplated by them. These sets of circumstances have been more or less defined by the Courts and are held by them to release both parties from any further obligation to fulfil the contract.
A part from supervening illegality... the question which the judge has to solve is this. Would any reasonable third party consider the effect of such circumstances as altering the obligation oil one or both of the parties to such an extent as to make the contract no longer capable of being enforced?....
This neatly summarises what is called the doctrine of frustration. We take the rule to mean that where consideration of the terms of the contract, in the light of the circumstance existing when it was made, shows that the parties never agreed to be bound in a fundamentally different situation which has unexpectedly emerged, the contract ceases to bind at that point. Applying this test to the facts of these appeals the first step would be to ascertain whether a fundamentally different situation ha arisen due to the unexpected failure of getting the permit.
The next would be whether the parties contemplated being bound in the altered situation. We think the unexpected failure has resulted (sic) making the situation fundamentally different to the appellants. They had made the purchase for exporting the commodity. They had been trying for nearly two years to get the permits. The had made the full payment in June 1944 or when they had been given assurance of getting the permit. Selling the seeds where they we bought would cause loss to them. No speci(sic) goods had been earmarked for them.
In these circumstances it cannot but be (sic)ferred that the failure had altered the situati(sic) fundamentally so far as the appellants were concerned. The next step is whether the part contemplated being bound in the altered situation. We have the finding by the trial co(sic) which has not been challenged before us, t(sic) the respondent''s stock of cotton seeds were a(sic) June.1944 insufficient to meet the demand (sic) account of the purchases. There is the further finding that the defence of sale in April, 194(sic) incorrect. Then there has been a sudden ceas(sic) of correspondence after December, 1944, (sic) notices were exchanged which were in June 1(sic)
The purchases being of commercial nat(sic) the ceaseless efforts to get the permit and silence of six months after the failure toge(sic) with the insufficient stock of cotton seeds respondent''s godown and no appropriation goods having been made towards the cont(sic) clearly indicate that the parties never completed being bound in case the permit was got. The reason for the respondent''s sil(sic) may have been that he had already got the m(sic) and was not anxious. But his case is not th(sic) was entitled to keep the money. In these circumstances, the cases before us are clearly (sic) of frustration of contract.
The position is not different under Contract Act. It is true that Sections 32 (sic) 56 of the Contract Act partially cover the of frustration, but their Lordships of Supreme Court in Satyabrata Ghose v Mu(sic)ram Bangur and Co., 1954 SCJ 1: (AIR 195 (sic) 44) (A) have rejected the contention that (sic) doctrine of frustration as recognised in E(sic) law does not come at all within the purvi(sic) S. 56 of the Indian Contract Act. In their Lordships observe as follows:
We hold, therefore, that the doctri(sic) frustration is really an aspect or part of th(sic) of discharge of contract by reason of suppling impossibility or illegality of the act a (sic) to be done and hence comes within the pu(sic) of Section 56 of the Indian Contract A (sic) would be incorrect to say that Section 56 Contract Act applies only to cases of physic possibility and that where this section applicable, recourse can be had to the pri(sic) of English Law on the subject of frustration.
Earlier in the same authority it was served:
This much is clear that the word "importable" has not been used here in the sense of physical or literal impossibility. The performance of an act may not be literally impossible but it may be impracticable and useless from the point of view of the object and purpose which the parties had in view; and if an untoward event or change of circumstances totally upsets the very foundation upon which the parties rested their bargain, it can very well be said that the promisor finds it impossible to do the act which he promised to do.
According to this test also the change of circumstances due to failure to get permit, (sic)ad totally upset the foundation upon which the (sic)arties had rested their bargain. We, there (sic)re, hold that under S. 56 of the Contract Act, he purchases have been void.
Having held the bargains to have become frustrated, restitution of benefits under (sic)e agreement would follow. It is true that the (sic)ght to restitution had been recognised only in 343 by the English Courts and that too only after the decision in Fibrosa Spolka Akcyjna v. airbairn Lawson Combe Barbour, Ltd., 1943 AC (sic)2 (B). But it would be helpful to have the (sic)asis on which the restitution in the circumstances was ordered. The facts of the case were (sic)at by a written contract the respondent company agreed to sell to the appellants, a Polish company, machinery for 4800 L., of which one (sic)ird was to be paid with the order. Delivery as to be in 3 or 4 months at the port of c.i. (sic)dynia in Poland, and of the amount due 1000 was paid with the order.
War broke out and the port was occupied by (sic)ermany. The House of Lords unanimously (sic)d that there was a total failure of consideration and as 1000 L was a conditional payment (sic) account of the purchase and not an out and out absolute payment the appellant could recover. It as further held therein that unless there be an (sic)press term there is no principle that the loss (sic) where it falls when the contract has been (sic)strated. The restitution was held to be under as contract to the party who has not got what bargained for. Viscount Simon says at p. 46:
It is a claim to recover money to which the defendant has no further right because in the circumstances that have happened the money 1st be regarded as received to the plaintiff''s (sic)...
(sic)rd Atkin observes at P. 55.
What is being now decided is that the application of an old-established principle of the (sic)nmon law does enable a man who has paid(sic)ney and received nothing for it to recover the (sic)ney so expended. At any rate, it can be said leaves the man who has received the money (sic)d given nothing for it in no worse position (sic)n if he had received none....
(sic)rd Russell of Killowen states at pp. 56 and (sic)
I can see no reason why the ordinary law, (sic)licable in such a case, should not apply. In (sic)h a case the person who made the payment entitled to recover the money paid. That is (sic)ight which in no way depends upon the conti(sic)ed existence of the frustrated contract. It (sic)ses from the fact that the impossibility of performance has caused a total failure of the con(sic)eration for which the money was paid....
(sic)d Macmillan concurs holding as follows at (sic)60 and 61:
Owing to circumstances arising out of the sent hostilities the contract has become im possible of fulfilment according to its terms. Neither party is to blame. In return for their money the appellants have received nothing whatever from the respondents by way of fulfilment of any part of the contract It is thus typical case of a total failure of consideration. The money paid must be repaid....
Lord Wright observes at p. 65:
The right in such a case to claim repayment of money paid in advance must in principle, in my judgment, attach at the moment of dissolution. The payment was originally conditional. The condition of retaining it is eventual performance. Accordingly, when that condition fails the right to retain the money must simultaneously fail. It is not like a claim for damages for breach of the contract which would generally differ in measure and amount, nor is it a claim under the contract. It is in theory and is expressed to be a claim to recover money, received to the use of the plaintiff....
Lord Porter gives his reasoning at p. 77:
Under that system money had and received to the plaintiff''s use can undoubtedly be recovered in cases where the consideration has wholly failed,... If a divisible part of the contract has wholly failed and part of the consideration can be attributed to that part, that portion of the money so paid can be recovered, but unless this be so there is no room for restitution under a claim in indebitatus assumpsit....
Two consequences flow from the aforesaid observations. The first is that part of S. 61 of the Sale of Goods Act providing for the recovery of money paid where the consideration for the payment had failed, is but a declaration of the ancient rule of restitution. The next to that rules governing relations while the contract subsists, would not be applicable to rights arising after the contract is discharged. At this stage the following observation of Lord Wright in, 1943 A. C. 32 (B), at p. 61 is relevant:
The claim was for money paid for a consideration which had failed. It is clear that any civilized system of law is bound to provide remedies for cases of what has been called unjust enrichment of unjust benefit that is to prevent a man from retaining the money of or some benefit derived from another which it is against conscience that he should keep. Such remedies in English law are generally different from remedies in contract or in tort, and are now recognised to fall within a third category of the common law which has been called quasi-contract or restitution....
It follows that the claims by each appellant for the return of the money he had paid for his 607 bags would not be dependent on an earlier demand by him for delivery of so many bags; for S. 35 of the Sale of Goods Act would not be applicable to their cases. It provides that apart from any express contract the seller of goods is not bound to deliver them until the buyer applies for delivery. Obviously where the buyer is not entitled to nor the seller liable to deliver goods because of the earlier supervening impossibility, the Section cannot be relied upon. It is true that any claim for damages due to failure to deliver goods is dependent on earlier demands for their delivery. Indeed, the seller cannot be held to have broken the contract unless there has been the earlier demand. In AIR 1935 67 (Privy Council) the Privy Council has held that.
There the appellants as sellers had claimed damages for breach of contracts for sale of yarn. The contracts had been partly performed and the buyers had refused to take further deliveries because a reasonable time had elapsed since the date of the contract. No time had been fixed for delivery of the goods under the contract. Both the Courts had dismissed the suit. It was held that in absence of a special promise the seller of goods is not bound to deliver them until the buyer applied for delivery. Lord Thankerton says at P. 98 (of Ind App): (at p. 70 of AIR):
Their Lordships are therefore of opinion that the respondents failed to fulfil their obligation under S. 93 and that they were not entitled on 3-1-1919, to treat the contract as cancelled.
The authority is hardly relevant where the contractual obligations had already become discharged. If the respondent''s obligation to lead the cotton seeds in waggon arose only after the permits were got, as the trial Court has held, the demand to deliver the seeds must necessarily be after obtaining the permits. Therefore, once getting the permit became an impossibility the contractual obligations between the parties were discharged. The seller would no longer be bound to load in Railway waggons and the buyers had not contracted to take delivery elsewhere. The possibility of delivery elsewhere cannot be ruled out, but that would not be under the old contract.
Where, in these circumstances, is the necessity of demand and what existing contractual obligation the party demanding is asking to be performed? Section 35, therefore, contemplates existing duty and after the discharge due to impossibility no such contractual duty exists. A person who has paid the money is entitled to restitution, but on a radically different ground. We think in these clear cases of unjustified enrichment the learned Judge of the trial Court had erred in insisting on earlier demands for delivery in order to make the respondent liable.
We also think the doubt expressed in the earlier judgment of the High Court regarding the appellants'' right to damages under S. 57 of the Sale of Goods Act no longer arises. The plaints had been amended in two cases as those for the return of the purchase money. Moreover, the Advocate had endorsed in all the cases that he was claiming under S. 61 of the Sale of Goods Act. Therefore, the appellants claim has been wrongly disallowed on the ground of the failure to demand delivery.
Once the right to restitution is established, it is further necessary to ascertain when the contracts of purchases became discharged. The next step is to adjudicate on what would be the equitable apportionment of the prepaid money, The finding of the trial Court is that the stock of cotton seeds in the respondent''s godown was sufficient to meet the purchases till June, 1944. The decrease thereafter indicates at least conviction on the part of the respondent that permit would not be available in the immediate future. The purchases were commercial contracts and parties need not wait for performance for an indefinite period.
Already the efforts of securing it had continued for a year and the chances of obtaining the permit had again receded. The appellants'' letters thereafter are fewer and after the letter complaining loss in December, 1944, there is silence. Admittedly it is not the respondent''s case that the appellants were negligent in trying to procure the permit. A rational conclusion from these facts is that the impossibility of procuring the permits became clear at the end of 1944 and the contracts were discharged.
As regards the equitable apportionment of the prepaid money, the trial Court in its first judgment after giving its findings on the several issues, had directed the parties to file memos showing the amounts that might be due either to the plaintiffs or to the defendant. After such memos were filed, the then learned Judge assessed the correctness of the claims of both the parties so put forward. He rejected the respondent''s claim, and held the plaintiff in the suit wherefrom appeal No. 686 of 1952 arises to be entitled to Rs. 7421/11/3.
He held the plaintiffs in the claim giving rise to appeal No. 625 of 1952 to be entitled to Rs. 4433/-. Finally, he found the plaintiff in the suit from which the appeal No. 626 of 1952 arises to be entitled to Rs. 5819/-. As these persons had not appealed, they may be taken to have been satisfied with the aforesaid orders of restitution. The Trial Judge had not in the judgment from which the present appeals and filed, gone into the question of quantum of restitution.
But most of the findings of the earlier judgment have been reaffirmed in the later judgment except the one about the appellants being no entitled to the refund. That view as already mentioned, is not correct. It follows that apart from that legal issue, the findings of the earlier judgment still stand. We have gone through the several memos then filed, which had been printed in the earlier appeals. We are satisfied that the plaintiffs in the several cases were the found entitled to an equitable adjustment. W(sic) would in the circumstances of the case, not a low interest. In these circumstances we a low these appeals as follows :
The appellant in Appeal No. 686/1952 w(sic) get against the respondent Rs. 7421/11/3 wit proportionate costs throughout. The appellant in Appeal No. 625/1952 will get against the respondent Rs. 4433/- with proportionate cost throughout. The appellant in Appeal No. 6(sic) of 1952 will be entitled to Rs. 5819 with proportionate costs throughout against the respondent. The respondent will get proportionate costs all the appeals to the extent of the amounts the have been disallowed.